The CEO Series: #reThink13 Edition – Chris Fanning of Survey Sampling International
Investor Jonathan Ewert interviews Chris Fanning, CEO of Survey Sampling International on the investment opportunity in Market Research.
Editor’s Note: Chris Fanning became CEO of Survey Sampling International in February of 2012. Prior to SSI, Fanning served as interim CEO of Lattice Semiconductor Corporation and prior to that Fanning was a consultant with The Boston Consulting Group and a Software Engineer. Having just completed his first year with the company, Fanning offers his views on the industry and the future.
By Jonathan Ewert:
JE: A year ago you left the semiconductor industry to come to one of the larger companies in the Market Research Business. Semiconductors are not the most traditional route to the marketing services business. Why the industry change? What about the market research business attracted you?
CF: Anyone selling goods and services to people anywhere in the world requires excellent, high quality market research to base business decisions on. A secular trend that’s been playing out for the past 5-10 years is Market Research professionals are under increasing pressure to deliver insight to their customers at an accelerating rate of delivery and with decreasing budgets. This trend favors scale companies with outstanding technology and customer service. Semiconductor and software businesses are a great foundation for that. Technology is key in that it can enable great new products and services and generate internal delivery efficiencies. In any dynamic market, the trick for customers when looking at technology is determining who truly has the steak and who’s simply marketing the sizzle. That’s no different here. SSI is a large, global leader with a long heritage of innovation and outstanding customer service. After a year at the company, I’m very pleased with my decision and see tremendous growth potential.
JE: It seems like there is an increased interest in Market Research companies coming from the investor worlds of private equity and venture capital. First, why do you think investors are coming to MR and second can you talk about what you focus on as the CEO of a company with backing from some of the top names in Private Equity?
CF: Investors are coming to Market Research because of the size of the opportunity and because the returns can be very attractive. That opportunity exists both for early stage investors who see new markets opening up, as well as late stage and growth investors who see value in management and growth of existing businesses. I am very fortunate in that I get to draw upon the experiences of two great PE firms – Providence Equity Partners and Sterling Capital. Both firms have been invaluable sources of a historical perspective on the industry and business, as well as very supportive of new, strategic areas where we are making investments. Both will drive growth for the business and, ultimately, the value of SSI for our investors.
JE: In the US, most MR companies have a channel-based sales and marketing strategy. Yet there are a few companies that go direct to brands. Where is SSI on that continuum and do you see it changing over time?
CF: SSI has been a little mixed in this area much like the other players in our space within the industry. It can be very tricky to work with channel partners on one hand and direct with clients on the other. SSI really values our channel relationships because our business was built on them. At the same time, customers in a variety of vertical markets that we serve have told me that they want more direct access to our company and to our experts. I think that this is true generally in the industry, but most particularly in some of the verticals that we serve; especially those that require a global footprint given our size in APAC and LatAm. Through those conversations, I have learned a great deal about where customers want to take their business and the role SSI can play in helping these customers grow. In the end, customers want to collaborate with us on solutions for them, and they also want to have an influence on where SSI invests for the future. That’s why we have made significant investments in resources and consultative skills development to our global Sales force.
JE: SSI is one of the top traditional panel companies in the world. At the same time, digital channels are creating new ways to for brands to access large numbers of consumers very quickly and cheaply. How are you thinking about innovation these days?
CF: How to innovate and apply technology is one of the most significant areas where I spend my time. The explosion of mobile technology is an obvious area of interest for our customers. They see the data – tablets will have a larger installed base than desktops very soon – and wireless penetration in developing countries is accelerating given the deployment economics for mobile carriers. The challenge is how do you capture this new mode of data collection and maintain high standards of quality. This is the classic fast and cheap versus high quality conundrum.
For example, anyone can claim “mobile capability” – and everyone does! But it’s important that customers scrutinize the “quickly and cheaply” appeal of mobile and social media outlets with the ultimate goal we all strive to achieve – how to provide very high quality data upon which market research is based that could ultimately be used to make multi-million dollar decisions. One approach SSI has taken is to develop mobile-based proprietary panels with our QuickThoughts app that create new respondents to our panel while leveraging our single global platform for blend and delivery. This app is rolling out globally in 2013 and has been one of the highest downloaded and rated apps since its launch late last year. It has the speed that people want, with the precision they need.
JE: What about global markets. Where do you see the largest opportunities for growth and revenue?
CF: The US and the EU are still the largest markets from a spend perspective and we have outstanding coverage in those regions. APAC is clearly an area of great interest to everyone and we’ve developed a large footprint in all the major countries. I’ve been managing businesses with significant positions in APAC for 25 years, particularly in China and Japan. These markets are very large with attractive growth rates, and tremendous change rates. In other words, what was common 5-10 years ago in China has been completely rewritten by their government and economy today. This requires real global players to move quickly and adapt, and conversely, it presents significant opportunities for those conducting market research because the change rate creates tremendous opportunity.
Latam is developing nicely with Brazil being the key country. We’ve developed a very strong Latam panel and we see tremendous interest in Brazil, especially with the upcoming World Cup and Olympics. Lastly, Africa will become more relevant in the not too distant future as governments and economies develop and stabilize.
SSI is fortunate to have an already good strong in the developing countries, and the capital to continue a rate of investment that will yield significant benefits for our customers.
JE: Let’s talk about the future. From what corner do you see the biggest challenge for SSI?
CF: SSI has been very successful for a long time. The past year has been great because I have been able to look at the considerable strengths the company has and fine-tune them for today’s marketplace. The biggest challenge now is to make sure we are focusing on the highest priority grow opportunities that are available to SSI. We need to make sure that our employees do not rest on their laurels or legacy operating practices and we need to make sure that we stay innovative, and focus on continuing to deliver great products and services to customers.
JE: What about the MR business generally. Do you think the industry will outpace GDP growth rates? And will that mean taking share from other sectors? Or will growth occur because the industry will innovate in new areas such as social media monitoring, DIY surveys, and other enterprise feedback methods?
CF: I am bullish on the MR industry because of the increasing importance of customer insights to inform business decisions. It’s a really big market that will grow on its own, but I also think that growth will accelerate because of new technologies. I see the entrance of DIY and social as positives because they will make the entire Market Research value chain more accessible to more companies. In the past, only the largest companies in the world had the scale to be able to absorb the costs as part of their product development and marketing efforts. Smaller companies had to go on hunches or incomplete data. Now and in the future, even small companies can access customers and consumers and include their voice in business decisions.